MANILA - The Court of Tax Appeals (CTA) en banc has denied the Bureau of Internal Revenue's (BIR) petition seeking a review of its ruling that cancelled the alleged P781.5-million tax deficiency of a Chinese-Filipino firm.
An earlier decision of the tax appellate court's 2nd division said the BIR had no valid authority to assess China State Philippines Construction Corporation from 2003 to 2005.
The firm is a contractor and supplier for public works projects funded or financed by the International Monetary Fund and the World Bank, among others.
It is a subsidiary of China State Engineering Corporation, a state-owned firm organized under Chinese laws.
The CTA had said the BIR's right to assess the firm for 2006 has already prescribed, given the 3-year prescription period within which to go after unpaid taxes.
In its latest decision, the court en banc reiterated that the assessment of the supposed P781.5-million tax deficiency for the 3 years in question is void for lack of a valid letter of authority.
The BIR, according to the court, could not raise its new argument that the returns filed by the company are false.
"The process of changing a theory of the case on appeal has consistently been rejected for being unfair and offensive to the basic rules of fair play, justice, and due process,” the court said.